Date: 20030311
Docket: T-149-03
Neutral citation: 2003 FCT 296
Vancouver, British Columbia, Tuesday, the 11th day of March, 2003
Present: Mr. John A. Hargrave, Prothonotary
BETWEEN:
ARTHUR WEBSTER
Applicant
and
ATTORNEY GENERAL
OF CANADA
Respondent
REASONS FOR ORDER
HARGRAVE P.
[1] This motion is to strike out an application for judicial review. The immediate hurdle which comes to mind is David Bull Laboratories v. Pharmacia Inc. [1995] 1 F.C. 588 in which Mr. Justice of Appeal Strayer pointed out, at page 596, that the proper way in which to contest an application, which the Respondent thinks to be without merit, is to appear and argue at the hearing of the motion itself. However, he did acknowledge, at page 600, that in very exceptional circumstances a Court might, either through inherent jurisdiction or by way of Rule 5 and analogy to other rules, summarily dismiss "a notice of motion which is so clearly improper as to be bereft of any possibility of success.". Mr. Justice Strayer pointed out that to be subject to such dismissal the case must be very exceptional indeed.
[2] While Mr. Webster's application is not an easy one on which to succeed, I am not prepare to strike it out on the test set out in the David Bull case. Indeed, for another and more compelling reason, the motion ought not to have been brought and thus is an abuse.
[3] To elaborate, the Respondent made a substantial written argument that the Trial Division of the Federal Court has, by section 18.5 of the Federal Court Act, no jurisdiction where jurisdiction is given to another Court, including to the Tax Court of Canada. However, counsel for the Respondent has abandoned that argument, for it was an argument made before Mr. Justice Rouleau and denied. This leads to some necessary brief background.
Some Relevant Background
[4] The Applicant was unsuccessful on a reconsideration of a reassessment of the Income Tax Act. Subsequently the Applicant appealed to the Tax Court of Canada, but then learned that the Minister's delegates had before them and put to the Minister untested confidential information obtained through an informer. On cross-examination the Tax Auditor, who prepared the material which went to the Minister, agreed that the information in her report was relevant, although untested and that the assumed fact or facts obtained from the informer related to a central issue in Mr. Webster's appeal. Counsel for Mr. Webster asked for and was refused an unedited copy of the Auditor's report: here I would add that there is an application before the Court, in this proceeding, to test the informer privilege claimed by the Crown as a reason for refusing production pursuant to Rule 318.
[5] Following learning of the information which was before the Minister, when the decision was made, being information denied Mr. Webster, Mr. Webster then set about bringing the present judicial review application.
Consideration
[6] The present application for judicial review being out of time, Mr. Webster applied in proceeding 02-T-77 for an extension of time within which to bring the application, contending that the Minister had breached the rules of natural justice and the principle of audi alteram partem, a breach of which the Applicant was unaware of until the cross-examination of the Minister's representative, the Tax Department Auditor, 31 October 2002. This application for an extension of time came before Mr. Justice Rouleau as a motion in writing. It is apparent, from the motion briefs and written argument in that file that among the issues canvassed, in seeking and opposing the time extension, was the jurisdiction granted to the Tax Court of Canada by section 18.5 of the Federal Court Act and whether or not the Applicant had a reasonable chance of success in the proposed application for judicial review. The chance of success of such a proceeding, or as it is put in Grewal v. Minister of Employment and Immigration [1985] 2 F.C. 263 (F.C.A.), the existence of an arguable case, is a mere requirement for such a time extension. The factors of delay and an arguable case are then to be balanced in order to do justice between the parties.
[7] Mr. Justice Rouleau, in his 10 January 2003 order, extended time for the commencement of this judicial review proceeding. While he did not give reasons, it is implicit that Mr. Justice Rouleau must have believed that there was, to one degree or another, an arguable case.
[8] Counsel for the Crown admits that the Crown made the argument that, by statute, jurisdiction was in the Tax Court of Canada, not the Federal Court. However, as an alternative reason for striking out, counsel for the Crown now refers to Harelkin v. University of Regina [1979] 2 S.C.R. 561, for the proposition that there is an adequate alternative remedy which the Applicant must use, that provided by the Tax Court of Canada. The Crown says that this was not argued before Mr. Justice Rouleau.
[9] There are two answers to the Harelkin proposition. First, a litigant ought not to be subject to a series of motions all dealing with essentially the same issue. Here, the Applicant has dealt with the issue of whether or not this judicial review proceeding should be allowed to go forward, before Mr. Justice Rouleau. That decision is under appeal by the Crown and thus the Applicant will have to deal with the argument, perhaps augmented by the Harelkin case, before the Court of Appeal. The Applicant had to deal with the same issue yesterday on this motion. The Applicant will have to deal with the same issue, again, on the pending test of informer privilege pursuant to Federal Court Rule 318. All of this constitutes an abuse, for the Harelkin case ought to have been raised at the first opportunity, that is, when the issue came from Mr. Justice Rouleau.
[10] I will, however, deal with the pure Harelkin proposition. Counsel for Mr. Webster makes a reasonable argument that at stake here is not the correctness of the assessment, that being the issue before the Tax Court, but rather whether the Crown, in the person of the Minister, breached its own procedure. Phrased in another way, the submission is that there is a difference, on the one hand, between the Tax Court's jurisdiction to determine the correctness of the assessment, that is the substance of the assessment and, on the other hand, the jurisdiction to examine the process which must be followed by the Minister, for the Tax Court does not have the jurisdiction to correct any procedural errors. This approach is not without precedent, by analogy: here I would refer to cases brought forward on behalf of Mr. Webster, including Edwards v. Canada [2002] 3 C.T.C. 339, Robertson v. Minister of National Revenue 2001 211 F.T.R. 172, Braceland v. Canada 1999 165 F.T.R. 93 and Kutlu v. Canada 1997 130 F.T.R. 85. Counsel for the Crown points out that these are decisions involving section 220 of the Income Tax Act, where there is no right of appeal to the Tax Court and therefore there must be judicial review to the Federal Court Trial Division. However, it still remains that the Tax Court lacks the jurisdiction to set straight the Minister, when he has erred procedurally. Here I have in mind that the Tax Court may offer neither declaratory relief (M.N.R. v. Devor [1993] 1 C.T.C. 142 at 143 (F.C.A.) and Prior v. The Queen [1989] 2 C.T.C. 280 at 283 (F.C.A.)) nor prerogative relief (Markman v. M.N.R. [1989] 1 C.T.C. 2381 at 2384-85 (T.C.C.)). All the Tax Court may do is adjudicate as to the correctness of the assessment: see Markman (supra) at 2383.
[11] Counsel for the Crown also refers to Girourd v. The Queen [1998] 2 C.T.C. 2547 (T.C.C.), for the proposition that the Minister's decision to confirm or vary an assessment, following a notice of objection, is an administrative act, as opposed to a quasi-judicial decision. However, I would observe that the Minister's decision in Girourd occurred under previous versions of sections 165 and 169 of the Income Tax Act. Moreover, it would appear from the Crown's own material, directed to the public and explaining the procedure in layman's terms, that the Minister is not necessarily making an administrative decision, for the proceeding before the Tax Court of Canada seems not to be in the nature of a trial, but rather in the nature of an appeal.
[12] While it may be that the Applicant will not necessarily succeed on its substantial characterization of this present judicial review proceeding as one to correct the procedural error by the Minister, a case within the jurisdiction of the Federal Court Trial Division, as opposed to challenging the validity of an assessment before the Tax Court of Canada, it is perfectly clear that this is not the very exceptional case which ought to be struck out as coming within the exception provided at page 600 in David Bull (supra). Thus the motion is denied. However, as I initially pointed out, this motion should never have been brought, for the whole issue ought to have been properly and fully argued before Mr. Justice Rouleau, for there was every opportunity on the part of the Crown to do so. In that sense the present motion has wasted the time of the Applicant, not to say the money of the taxpayer. This leads to the question of costs.
[13] I am not convinced that there has been the sort of misconduct connected with this litigation which would attract solicitor and client costs: such usually requires reprehensible, scandalous or outrageous conduct. However, the present motion does come near misconduct in the sense, as I say, that it ought not to have been brought at this stage and as such is an abuse. The whole area ought to have been canvassed as part of the motion before Mr. Justice Rouleau in January of this year. Thus the outcome of the motion attracts costs taxable at the top end of Column 5 of Tariff B, payable forthwith following taxation or agreement.
(Sgd.) "John A. Hargrave"
Prothonotary
Vancouver, British Columbia
March 11, 2003
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-149-03
STYLE OF CAUSE: Arthur Webster v. Attorney General for Canada
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: March 10, 2003
REASONS FOR Order : Hargrave, P.
DATED: March 11, 2003
APPEARANCES:
Mr. D. Laurence Armstrong FOR APPLICANT
Ms. Lisa M. Macdonell FOR RESPONDENT
SOLICITORS OF RECORD:
Armstrong Nikolich FOR APPLICANT
Victoria, BC
Morris Rosenberg,
Deputy Attorney General for Canada FOR RESPONDENT
Ottawa, Ontario